Overview | History | Business expansion | Change with continuity | Business philosophy | Community welfare

The making of the Murugappa Group
The Murugappa Group, headquartered in Chennai, India, is a USD 2.4 billion (Rs 9,582 crore) conglomerate with interests in engineering, abrasives, sanitaryware, fertilisers, finance, bio-products and plantations. It has 29 companies under its umbrella, of which eight are listed and actively traded on the National Stock Exchange and the Bombay Stock Exchange. Together, they have over 32,000 employees. With 40 units spread across 12 states in India, the Murugappa Group is one of India's oldest business houses. It has a presence in the UK, the USA, Australia, Canada, South Africa, UAE, Thailand, and China.

From acorn to oak
The business has its origins in 1900, when Dewan Bahadur A M Murugappa Chettiar established a money-lending and banking business in Burma (now Myanmar), which then spread to Malaysia, Sri Lanka, Indonesia and Vietnam. In these 100-plus years, it has withstood enormous vicissitudes, including strategically moving its assets back to India and restarting from scratch in the '30s, before the Japanese invasion of Burma in World War II.

Starting with a sandpaper plant, the Group forayed into making steel safes, and then into manufacturing. It set up an insurance company, and bought a rubber plantation; making a small but significant beginning. The rest is history.

Today, it is one of the country's biggest industrial houses. Group turnover crossed the USD 1 billion mark in 2003-04, with an impressive growth of 25 per cent over Rs 4,206 crore in 2002-03, and a 40 per cent jump in profit before tax over the previous year. Consolidated Group turnover for 2004-05 crossed USD 1.44 billion, a growth of 20 per cent over the previous year. In 2005-06, combined turnover increased by 17 per cent to USD 1630 million (Rs 7,340 crore) and net profit (PBT) by 45 per cent to USD 177 million (Rs 800 crore). The Group ended the year 2006-07 with a turnover of Rs 8,446 crore, and profit before tax of Rs 649 crore. The year 2007-08 saw a turn over of Rs USD 2.4 billion(9,852 crore) and has the Group well on its way to achieving its vision of becoming a USD 4 billion conglomerate by 2010.

The management has also set in motion long-term growth plans for all of its key businesses. Capital expenditure rose from Rs 579 crore against Rs 570 crore the previous year

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Changing times, constant values
Today the Murugappa Group is firmly rooted in its homeland, and is poised to take on the world. Building on the same business acumen, modern and innovative outlook, as well as vision with which the founder of the Group left his native land to seek his fortune in Burma, the Murugappa Group is on the threshold of the global business arena today, backed by 100 years of experience in diverse fields, sound traditional values and high ethical standards.

The group is a market leader in India across a spectrum of products like sanitaryware, fertilisers, abrasives, automotive chains, car door frames and steel tubes. Neemazal, a neem-based organic pesticide, is the market leader in bio-pesticides. Some of the country's best-known brands like BSA and Hercules in bicycles, Parryware in sanitaryware, Parrys Spirulina and Parrys Beta Carotene in nutraceuticals, Ballmaster and Ajax in abrasives, Gromor and Paramfos in fertilisers, and many more come from the Murugappa Group.

Its companies have tie-ups with Wendt gmbh of Germany, Morgan Crucible Company plc of the UK, the China Engineering and Exploration Bureau (CEEB), Cerdak Pty Ltd of South Africa, Mitsui Tsumitomo Insurance Company Ltd of Japan, DBS Bank of Singapore, Borg Warner Morsetec of USA, Foskor Ltd of South Africa, Groupe Chimique Tunisien of Tunisia, Cargill International SA of Geneva and ROCA of Spain. It has registered 43 international patents for its research and development innovations.

The group has grown consistently through its decisive and visionary response to changing times. Its pioneering efforts, steadfast commitment to ethical business practices and its dogged pursuit of new areas to extend its business acumen have brought in its wake several prestigious national and international awards. The Group's business philosophy can be summed up in this couplet from the ancient Indian treatise on wealth creation and governance, the Arthashastra:

"The fundamental principle of economic activity is that no man
you transact with will lose, then you shall not."

Conducting business by a clear set of values and beliefs, the Group has observed very high standards of ethics and transparency. Its belief in organisational renewal has allowed the Group to adapt itself to changing economic contexts and grow from strength to strength. The Management Development Institute (IMD) of Lausanne, Switzerland, conferred the 'IMD Distinguished Family Business Award' on the Group in 2001.

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Change with continuity
After India's independence, the company formed two JVs with the help of a local entrepreneur, Ramaswami Mudaliar. The first, with Tube Investments of the UK, was formed to manufacture Hercules bicycles in 1949, and called Tube Investments of India (TII). In 1952, A M M Murugappa Chettiar (1902-65) struck a successful joint venture with Carborundum, USA and Universal Grinding, UK, to set up a manufacturing facility for abrasives at Tiruvottiyur, Chennai. It was called Carborundum Universal Madras India (CUMI).

The third generation of the Murugappa Group's promoters found opportunities to acquire and turn around businesses when, in 1981, the Group acquired EID Parry. With this acquisition came a 7 per cent stake in Coromandel Fertilisers Ltd as well as EID Parry's fertiliser business. Since then, over the last 25 years, the Murugappa Group has acquired over 22 businesses - big and small - across all the sectors of its businesses

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Leap of faith
The Murugappa Group has drawn from its rich heritage to carry out organisational and entrepreneurial changes through transparency, and without operational disruption. The family-managed Group successfully transitioned to a professionally managed corporate house, engaging Arthur D Little for restructuring and succession plans, following the demise of M V Arunachalam (1929-96), which brought the leadership to the older A M M Arunachalam, who passed away in 1999.

It was in 1999 that M V Subbiah decided to step down, bring in an external chairman for the Group, and let the family take advisory positions. The Murugappa Corporate Board was formed and N S Raghavan, a professional, was appointed as Chairman. On his retirement in 2001, P S Pai took over as Executive Chairman. During Pai's tenure the Group went through a period of learning and growth. On completion of his tenure, M A Alagappan, took over as Executive Chairman in October 2006 and A Vellayan as its Vice-Chairman and Director-Strategy.

Each successive generation has not only strengthened existing businesses but has developed new ones. It has developed unmatched expertise in turning around sick businesses in the shortest possible time following acquisition. The Group manages the evolution of its businesses and governance structures consciously. As a result, the Group's business portfolio is diverse and dynamic.

Dedicated employees drive the Group. The Murugappa Group has always believed in the welfare of its employees. Each company provides excellent opportunities for learning and growth to all its employees.

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Commitment to the community
The Group founders were aware of the importance and necessity of corporate contribution to the welfare of the community they were operating in, from the time they began their journey in 1924. The AMM Trust was formed to set up and run hospitals and schools in Chennai and Pallathur, the native place of the founders.

The Murugappa Group continues to build on the culture of philanthropy initiated by its founder. Social commitment has always been the cornerstone of the group's ethos and it has been at the forefront of eco-conservation, public health, and education in the communities where its companies operate, since 1957.

It runs four schools, a polytechnic college and four hospitals. Besides, the group runs a research and development centre for rural development, the Sri AM Murugappa Chettiar Research Centre (MCRC), which has been designing simple, cost-effective technologies for local artisans since 1977.

The Group has scaled each pinnacle consistently through its decisive and visionary response to changing times. Its pioneering efforts, steadfast commitment to ethical business practices and its dogged pursuit of new areas to extend its business acumen have brought unprecedented success and several prestigious national and international awards. But there is no stopping for the Murugappa Group; the journey is still on, in search of scaling newer heights and finding greener pastures - beyond the horizon.

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